Blair is going, but Thatcher still rules

In the last days of Blair's premiership, Simon Jenkins is struck by the stunning resilience of Thatcherite doctrine: in time, New Labour will be seen as nothing but a change of crew When Tony Blair entered Downing Street in 1997 he had to decide whom first to invite to his new home. Surely it would be one of his Labour predecessors, Jim Callaghan, Michael Foot or Neil Kinnock, all itching for an invitation? The answer was no. The lucky guest was Margaret Thatcher. Round she came, and in spirit she never left.

As Blair leaves office, political historians are going to get him completely wrong. They will rightly depict him as a leader who reformed the Labour party and ended the long Tory ascendancy at Westminster. But they will also depict him as reshaping the political map of Britain and refashioning the public sector on a scale not seen since Attlee. They will see him and Gordon Brown, his Chancellor and successor, as creating a 'new Left', defined in terms of choice, equality of opportunity and the targeted relief of poverty, thus reorganising the anti-Conservative forces in Britain and giving them a new sense of direction. This is rubbish.

The story of British government is too often read from a stool in Parliament Square or a BBC studio. The physical layout of parliament offers an easy contrast of in and out, left and right, right and wrong. Democracy is a general election, enshrined in a Commons majority. Political reporting is reduced to watching the dramatis personae of Westminster playing musical chairs. This version of elite Britain as essentially a club has not changed since the 18th century. It gives no insight into how the country is run.

Tony Blair was always a maverick, a cuckoo in the Labour nest. A public schoolboy with immense charm, he was Tory by parentage, Social Democrat by instinct and Labour only by marriage. With an ambitious wife, he early applied his people skills to telling Labour's traditional emperors that they had no clothes. Having not won an election for two decades, they collapsed before him Between 1992 and 1995, Blair and a small cabal of talented aides reading from the gospel according to Philip Gould destroyed every vestige of Labour pluralism. He smashed the unions, dismantled the national executive and demoted the party conference and membership. It was always Blair's head (never Brown's) above the parapet and this was unquestionably his greatest achievement in politics, clearing the ground for his style of Napoleonic leadership. He was the classic Weberian 'charismatic', hijacking a semi-defunct party and using it as a vehicle of personal aggrandisement. Denied by the constitution a real presidency, he created a virtual one.

Blair's 'project' was aimed at the one objective of getting himself elected in 1997. He had no great message to bring the world but was convinced that he needed not only to rid himself of the Labour party incubus but also to rid himself of its policies. One by one Blair, with Brown in support, reversed specific party pledges to reverse monetarism, undo Thatcher's union reforms, renationalise privatised utilities and end means testing. To win over the right-wing press Blair even turned Eurosceptic, with a series of bombastic columns in the Sun. When Blair and Alastair Campbell grovelled at the feet of an astonished Rupert Murdoch, they were asked if all this was serious and not just electioneering. Blair replied that it was 'absolutely for real'.

Blair and Brown continued to attack what they could in John Major's `Thatcherism with a human face'. They were scathing about Norman Lamont's private finance initiative, 'a cynical distortion of the public accounts', according to Blair. They opposed trust schools and private provision in the NHS. But Blair was careful never to criticise Thatcherism as such, regarding it (probably wrongly) as a proven electoral asset that the public needed to know he would not reverse.

As a result, on taking office in 1997, Blair's policy cupboard was astonishingly bare of originality. Apart from devolution and a ragbag of targetry, it was a vapid concoction of `third way' platitudes. Civil servants expecting to receive detailed briefs from incoming policy groups received nothing, only demands from Blair for daily initiatives to respond to headlines. Brown arrived at the Treasury scarcely better equipped, committed only to honouring Tory spending limits and to a modest scheme, ludicrously overspun, to relocate the monetary policy committee in the Bank of England. Blair and Brown were like two generals who knew how to win a bridgehead but lacked a plan for moving beyond.

There was one institution to hand with policies and to spare — the Treasury, and the new government grasped at its offerings with alacrity. The Treasury was the holy shrine of Thatcherism. Flitting through its corridors were the Marx and Engels of the new ideology, Geoffrey Howe and Nigel Lawson. To Brown, here was a department of clever, aloof, secretive ascetics who talked only to bankers and to God. Though Brown did not warm to Treasury officials — or anyone in government — he liked their ethos. Under the 1994 Granita agreement with Blair he enjoyed sovereignty over domestic policy and now happily delivered Thatcherism to the Downing Street court, against any amount of Cabinet and party scepticism.

Brown proved more Thatcherite than any of his predecessors, plunging where they had feared to tread. Thatcher had opposed rail, coal and Post Office privatisation. Brown not only accepted every privatisation so far undertaken but faced down Blair and insisted that the London Tube be sold on risk-free 30-year contracts to private companies. He privatised the Royal Mint, the Tote, the Commonwealth Development Corporation and as much as he could of the government estate, even selling the Inland Revenue to an offshore tax shelter. He encouraged councils to privatise their tower blocks, pension funds, parking schemes, even themselves (Westminster City is run by a private company). Brown loved Thatcherite terminology, talking about tiger economies, turbo-capitalism, cyber-revolution and e-government.

In social policy the new government tackled realms that the Tories treated as no-go areas (largely for fear of Blair and Brown). They curbed single-parent and disability benefit and introduced workfare from America. They propagated such icons of LawsonThatcherism as incentive bonuses to public officials. They spent the equivalent of one pence on income tax on private consultants. They favoured what Thatcher called 'our people', car drivers, drinkers, suburban builders and frequent flyers. When the IFS concluded in 2005 that 'income inequality in Britain is still higher than at any time in the previous 18 years of Conservative rule and probably for at least 20 years before that', neither Blair nor Brown batted an eyelid.

By far the biggest conversion to Thatcherism concerned public investment. Over half was simply privatised, greatly to the benefit of the City but at vast long-term cost to the public exchequer. Every government department, agency and local authority was told by the National Audit Office's Jeremy Coleman `to be under no illusion that PH is the only game in town'. Any school, prison, hospital, housing estate, road, even government office had to be built by the private sector. By 2007 40 per cent of the new owners of these institutions had sold them at a profit. What had been built with gilt-edged 5 per cent bonds now had to bear some 20 per cent of long-term debt. Blair will leave NHS hospitals with £17 billion of debt, to be paid to private financiers over the next quarter century. He also introduced a concept of which even Thatcher had fought shy, an internal fixed-price market for operations in which the NHS would have to compete with the private sector. It was a recipe for the chaos into which the NHS sank in 2006/7.

These U-turns rank among the most sensational in British political history. Yet they passed virtually unnoticed because they mimicked, to the point of caricature, the policies of the outgoing Major and Thatcher governments. Thatcherism's trust hospitals were Labour's foundations. Its foundation schools were Labour's trusts. The curbing of local option, the pursuit of choice, the league tables and targetry were all borrowed from the Major government, but because they were now 'Labour' they could not be called Thatcherite. The Westminster stereotype was topsy-turvy. How could the Tories complain when a Labour Chancellor ordered Stoke-on-Trent to vest all its school buildings in Balfour Beatty, which then proceeded to close them down as unprofitable?

Blair's adherence to the outlook of his heroine was not confined to home affairs. He soon turned his back — seeking `the heart of Europe' — as she and Major had both done on taking office — in favour of the American bond. While half-hearted attempts were made by Robin Cook to clothe Blair's adventurism in 'ethical' garb, it was essentially if vaguely neo-imperial. It pronounced a 'Western values agenda' to be imposed on sovereign states at will. The politics of fear and a wildly inflated war on terror became the leitmotif of speech after speech. Told by Thatcher to 'hug Washington close', Blair did so to a fault, from the mountains of Bora Bora to the streets of Fallujah and the cells of Guantanamo Bay.

Although Blair made a spirited bid after the 2001 election to make Europe, as he put it, `the cornerstone of the new parliament', he found it merely a source of dissension with Brown. He signed the Maastricht treaty as promised in his manifesto but did not implement it and eventually ceded to Brown a de facto veto not just over the euro but over further European integration. Blair's 2005 presidency of the council of ministers was a fiasco. Under him Britain remained semi-detached from Europe and beyond Thatcherite reproach. His glee at being let off the hook by the French and Dutch referendum votes against the 2005 constitution was ill-concealed.

There is now no meaningful divide between the leaderships of the major political parties in Britain over the framework of public services. All accept the new Thatcherite settlement — its strengths and weaknesses. Argument is over the means of implementing it. In 1979 the British public sector appeared in scope and character much as it had in 1969 or even 1959, producing cars, ships, coal and steel, running planes and trains and operating a diffuse but wholly nationalised welfare state. By the time Blair came to power 18 years later this archaic political economy had been transformed into one that is still recognisable today. One day, Blair's triumph in 1997 will seem like nothing more than a change of crew.

Traditionalists of both left and right contest this thesis. The Left protests that only Labour would have spent so much on hospitals and schools. Only Labour would have had the courage to introduce tax credits and such expensive central initiatives as Sure Start and New Deal. The Right protests that there was only one Thatcher, and her glory cannot be shared with upstarts, least of all Labour ones. No Thatcherite chancellor would have allowed the spending burst after 2001 or Brown's reckless borrowing, even if it were private.

I doubt both these objections. All recent governments have behaved in much the same way at different stages of the electoral cycle. They tax and spend when they need to. They centralise power and hire more civil servants. Thatcher spent way beyond inflation on public pay, health and crime. Like Blair she was a strong believer in command and control through the patronage state. When I once suggested to her that she had not advanced the cause of laissez-faire she exploded. She believed in strong government `to do what is right' and I should never use that 'dreadful French phrase' again. Insofar as leaders or parties might have behaved differently since the mid-1980s, the difference would have been of nuance, tangential to my thesis.

Blair has been a true son of Thatcher. Essentially a presidentialist, he appealed over the heads of political and democratic institutions to the people at large. He found a shattered 'shell' of a party and bent it to his will. His wayward treatment of policy shows a man devoid of personal ideology. He may not have been a dyed-in-the-wool Thatcherite, in the sense that Brown became one under the influence of the Treasury. To Blair Thatcherism was part reality-check, part opportunism. But neither he nor Brown changed the major premises of government policy they found on entering office in 1997. What appeared to have worked for the Tories they made certain worked for them.

I see no reason why the man who takes office as prime minister next week should seek any other way. As it says over the gates of the temple, there is no alternative.

A new edition of Simon Jenkins's Thatcher & Sons is published by Penguin in the autumn.